European equities edged lower on Friday as a surge in oil prices to above $90 a barrel countered tentative relief in bond markets, extending the pan-European STOXX 600’s longest losing streak since September 2023.
The STOXX 600 closed 0.12% lower at 650.35 points, marking its seventh consecutive session of declines. France’s CAC 40 fell 0.6%, while Sweden’s benchmark index bucked the trend with a 0.3% gain. The broad retreat followed a midweek stabilization in eurozone bond yields, which had surged to multi-year highs before the U.S. Treasury’s liquidity support for long-term debt eased pressure.
Brent crude futures rose 2.2%, pushing prices above $90 a barrel as U.S.–Iran talks aimed at ending the six-month conflict in the Middle East stalled, raising concerns over disruptions to energy supplies through the Strait of Hormuz. Energy stocks advanced 0.9%, outpacing the broader market, while travel and leisure equities declined 0.7%.
Corporate earnings and guidance updates added to the mixed performance. JD Sports tumbled 14.3% to the bottom of the STOXX 600 after slashing its profit outlook, citing a sharper-than-expected decline in second-quarter underlying sales, particularly in North America. Kering, the Gucci parent, slipped 3.6%, and LVMH, owner of Louis Vuitton, slid 2.83% to 443.10 euros.
In contrast, Novonesis surged 9.7% after reporting better-than-expected second-quarter results, raising its full-year guidance, and announcing a share buyback. The company’s outperformance underscored pockets of resilience amid broader weakness.
Macroeconomic data added to the cautious backdrop. German producer prices rose at their fastest pace in over three years in July, driven by higher costs for intermediate goods and energy. Meanwhile, Sweden’s Riksbank held its key interest rate steady at 1.75%, as widely expected, providing no immediate impetus to local equities.
Analysts warned that inflation risks could persist. Ipek Ozkardeskaya, senior analyst at Swissquote, noted that price pressures may intensify in upcoming readings, as July’s retreat in energy prices proved temporary. With no near-term resolution to Middle East tensions, the balance of risks remains skewed toward higher inflation.
